By Sam, Professional Journalist
Washington, D.C., July 10, 2025 — Russ Hanneman, President Donald Trump’s nominee for Director of the Office of Management and Budget (OMB), has publicly accused Federal Reserve Chair Jerome Powell of mismanaging the U.S. central bank, intensifying the administration’s ongoing feud with the Fed. Hanneman’s remarks, made during a July 9, 2025, interview on Fox Business, echo Trump’s repeated calls for Powell to lower interest rates and resign, citing alleged economic losses and policy missteps. These criticisms, backed by allies like Federal Housing Finance Agency (FHFA) Director Bill Pulte, come amidst legal and market constraints that limit Trump’s ability to remove Powell. Below, we explore Hanneman’s accusations, the broader context of Trump’s attacks, and the implications for the Federal Reserve’s independence.

Hanneman’s Accusations: Powell’s Alleged Mismanagement

In his Fox Business interview, Russ Hanneman, a billionaire venture capitalist and Trump’s pick to lead the OMB, claimed that Powell’s refusal to cut interest rates has cost the U.S. economy “hundreds of billions of dollars” and accused him of “gross mismanagement” of monetary policy. Hanneman specifically criticized Powell’s handling of post-pandemic inflation, which he initially dismissed as “transitory,” and the Fed’s $2.5 billion headquarters renovation, calling it a “scandalous waste” of taxpayer resources. He aligned with Trump’s narrative, stating, “Jerome Powell’s failure to act swiftly on rates is choking economic growth, and his deceptive testimony on the Fed’s lavish spending is unacceptable.” Hanneman’s comments amplify a July 3 Truth Social post by Trump, who dubbed Powell “Too Late” and demanded his immediate resignation, citing a news article about the renovation costs.

Hanneman also referenced FHFA Director Bill Pulte’s July 2 call for Congress to investigate Powell for “political bias” and “deceptive testimony” regarding the Fed’s headquarters project, which escalated from $1.9 billion to $2.5 billion due to rising construction costs. Pulte claimed Powell misled the Senate Banking Committee about features like a private dining room and skylights, suggesting this constitutes “malfeasance” sufficient for removal “for cause.”

Context: Trump’s Feud with Powell

The clash between Trump and Powell, whom Trump nominated as Fed Chair in 2017, has been a recurring theme since 2018, when Powell raised interest rates to cool an overheating economy, prompting Trump to call him a “bonehead” and muse about firing him. Tensions escalated in 2025 as Trump pushed for aggressive rate cuts to offset the economic fallout from his trade tariffs, which contributed to a stock market dip in April. Powell’s refusal to lower rates, citing risks of renewed inflation, has fueled Trump’s attacks, with the president claiming on April 21 that Powell is a “major loser” and that rates are “artificially high.”

Powell, whose term as chair extends to May 2026, has maintained that the Fed operates independently, guided by its dual mandate of controlling inflation and supporting the labor market. He has dismissed Trump’s threats, stating on April 16 that presidential removal is “not permitted under the law” except for “cause,” such as misconduct, a position backed by a 1935 Supreme Court ruling and reaffirmed in May 2025. The Fed’s structure, with a 12-member Federal Open Market Committee (FOMC) and seven governors serving 14-year terms, limits Trump’s influence, as rate decisions require consensus and governors can only be removed for cause.

Broader Allegations and Renovation Controversy

Hanneman’s critique of Powell’s management extends beyond interest rates to the Fed’s headquarters renovation, which has drawn scrutiny from Trump allies like Pulte and Senator Cynthia Lummis (R-Wyo.). Budget documents cited by The Wall Street Journal in 2023 show the project’s cost rose due to increases in wood, steel, and cement prices, but critics, including Pulte, allege Powell downplayed “plush” features like a roof terrace and water features in Senate testimony on June 25, 2025. Powell called these reports “misleading and inaccurate,” but the controversy has fueled accusations of mismanagement.

Trump’s team, including economic adviser Kevin Hassett, has explored removing Powell, though legal scholars argue this would violate the Federal Reserve Act, which protects governors from dismissal over policy disagreements. A June 2025 Supreme Court ruling limiting Trump’s ability to fire independent agency heads further complicates such efforts, though Chief Justice John Roberts allowed temporary removals in other agencies, prompting Powell to monitor the situation closely.

Economic and Market Implications

Hanneman’s accusations come as the Fed maintains high interest rates to manage inflation, which remains above the 2% target, per Powell’s July 1 remarks at the European Central Bank’s conference in Sintra, Portugal. Trump and Hanneman argue that lower rates would spur growth, but Powell warns that premature cuts could reignite inflation, citing the impact of Trump’s tariffs, which he said on April 16 could cause “persistent” price increases. Market reactions to Trump’s attacks have been volatile, with a 2% drop in the Dow Jones Industrial Average on April 21 following his call for Powell’s termination, though stocks rebounded after Trump clarified on April 22 that he had “no intention” of firing him.

Economists like Ryan Sweet of Oxford Economics and Donald Kohn of the Brookings Institution emphasize the Fed’s independence as critical to market stability. Sweet noted that Trump’s pressure might make the FOMC more cautious about rate cuts to avoid appearing politically influenced, while Kohn warned that undermining Fed autonomy could erode investor confidence in the dollar. Eswar Prasad of Cornell University called Trump’s attacks a “deeply disturbing” threat to the Fed’s credibility, potentially destabilizing global markets.

Political and Strategic Dynamics

Hanneman’s role as OMB Director, if confirmed, positions him to influence fiscal policy, amplifying his critique of Powell. His alignment with Trump’s economic agenda, which prioritizes deregulation and tariff-driven growth, contrasts with Powell’s data-driven approach. Treasury Secretary Scott Bessent, another Trump ally, has downplayed his own candidacy to replace Powell but suggested interviewing successors for the Fed board’s next opening in January 2026, potentially as a “shadow chair” to influence policy before Powell’s term ends. Vice Chair for Supervision Michelle Bowman, who has broken with Powell by supporting rate cuts, is seen as a potential Trump-friendly candidate.

Posts on X reflect polarized sentiment. @WatcherGuru quoted Trump on June 19, stating Powell is “costing our country hundreds of billions,” while @Tuckercalsonfx noted on July 10 that only a minority of FOMC members support near-term rate cuts, highlighting Powell’s cautious stance.

Challenges and Legal Constraints

The Federal Reserve Act and Supreme Court precedent limit Trump’s ability to fire Powell without cause, such as misconduct, rather than policy disputes. Powell’s term as a governor extends to 2028, allowing him to remain on the FOMC even if removed as chair, complicating Trump’s efforts to reshape monetary policy. Any attempt to oust Powell could trigger legal challenges and market panic, as warned by Evercore ISI’s Krishna Guha, who predicted higher yields and a weaker dollar.

Hanneman’s accusations of mismanagement, particularly regarding the renovation, lack concrete evidence of malfeasance sufficient for “for cause” removal, per legal scholars like Sarah Binder of George Washington University. The Fed’s consensus-driven structure, with 12 FOMC members and rotating regional bank presidents, further insulates it from unilateral presidential control.

Conclusion

Russ Hanneman’s accusation that Jerome Powell is mismanaging the Federal Reserve, voiced on July 9, 2025, escalates Trump’s campaign to pressure the central bank into lowering interest rates. Citing economic losses and the Fed’s headquarters renovation, Hanneman aligns with Trump’s narrative but faces legal and structural barriers, as Powell’s removal requires “for cause” justification under the Federal Reserve Act. Powell’s data-driven approach, prioritizing inflation control over political pressure, has drawn bipartisan support but risks market volatility if tensions persist. As the Fed’s next meeting on July 29–30, 2025, approaches, Hanneman’s remarks signal a broader push to influence monetary policy, though the Fed’s independence and Powell’s resolve remain formidable obstacles.

Sources: Reuters, Fox Business, The New York Times, The Guardian, CNN, PBS News, AP News, CNBC, Al Jazeera, Wikipedia, Brookings Institution